Understanding the Role and Powers of the Settlor in Trust Creation
A settlor creates a trust by expressing their intent, also known as a trustor, grantor, or donor. Corporations and partnerships can act as settlors. This overview clarifies the difference between inter vivos and testamentary trusts and discusses the rights a settlor may retain — such as legal title, life interest, and powers to amend or revoke the trust. The Supreme Court of Texas case, Westerfeld v. Huckaby, highlights issues surrounding the retention of powers by settlors. Understanding these aspects is crucial for effective trust management and administration.
Understanding the Role and Powers of the Settlor in Trust Creation
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Presentation Transcript
Generally • Creates trust by manifesting trust intent. • Also called: • Trustor (old) • Grantor (tax, overbroad) • Donor (overbroad) • Corporations, partnerships, etc. can be settlors. § 111.004(10).
Capacity -- § 112.007 • Inter vivos trust = inter vivos gift • Testamentary trust = testamentary capacity
Retention of Powers by Settlor • Westerfeld v. Huckaby – p. 61 • Did settlor reserve too many powers? • 5-4 decision of Supreme Court of Texas.
Retention of Powers by Settlor • Trust Code § 112.033. Settlor may retain: • Legal title (serve as trustee) • Life interest • Power to amend, modify, and revoke • Power to change beneficiary • Control over trust administration • Ability to add property to trust
Retention of Powers by Settlor • “Dacey” Trusts 5 editions from 1965-1993.
